MANILA, Philippines ? Stockholders owning 28 percent of the common shares of San Miguel Corp., including the national government, agreed to switch to high-yield preferred shares meant for investors who are jittery about the diversification strategy of the conglomerate.

The government, which controls a 24-percent sequestered block through the Presidential Commission on Good Government, participated in the conversion, Finance Secretary Margarito Teves and San Miguel president Ramon Ang separately confirmed Friday.

San Miguel disclosed to the Philippine Stock Exchange that 476.3 million class ?A? shares or those open only to local investors and 396.9 million class ?B? shares or those open to both local and foreign investors accepted the company?s offer to convert their exposure to a new series of preferred shares with a guaranteed annual cash dividend rate of 8 percent.

Preferred shares are prioritized in terms of dividend payment and liquidation compared to common shares but they will not enjoy voting rights in this case.

San Miguel has scheduled the execution of the special block sale of the subject common shares at the PSE on October 9. Each common share will be exchanged for one preferred share priced at P75 each, resulting in an immediate price gain of about 14 percent based on Friday?s stock price closing.

The company?s ?A? shares closed at P65.50 while the ?B? shares closed at P66.

San Miguel said the review and processing of the necessary documentation for the completion of the share exchange and preparation for the execution of the special block sale on the PSE had been delayed due to a shortage in company personnel, most of whom were unable to report for work due to the recent calamity brought by Tropical Storm ?Ondoy.? As such, the block sale was rescheduled from the original target date of October 2.

Analysts said the terms of the preferred shares were attractive as the dividend rate would translate to about four times what common shareholders were previously getting. Over the past 12 months, the dividend rate on San Miguel?s common shares was 2.3 percent.

The price of P75 a share was also seen as acceptable as it was about the same price that retail tycoon Henry Sy previously sold out a minority stake in San Miguel.

While key shareholders of San Miguel are optimistic about the conglomerate?s long-term value, the alternative of converting from equity into debt-like instruments targeted the more conservative investors.